If you are an on-demand worker or Wonolo 1099 freelancer, then this is the post for you.
Doing your own taxes is a stressful process that most people would prefer to avoid. However, this year you can feel a little less stressed knowing that this guide will help you. The great thing about being a freelancer with Wonolo is the tax benefits- you have all of the freedom with a ton of 1099 benefits!
In this quick n' easy guide, we'll take care of everything you need to know from start to finish. No more worrying about paying quarterly taxes, tax deductions or tax penalties- just read here.
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Taxes You'll Owe As A Wonolo Independent Contractor
Wonoloers are considered their own self-employed business. This means you are responsible for paying all of your taxes. It is your duty to understand what taxes you'll need to pay. Let's dive into the different kinds you'll owe Uncle Sam at the end of the year.
Social Security & Medicare Taxes
Independent contractors for Wonolo need to pay self-employment tax or Social Security and Medicare taxes on the income they earn from freelancing. Self-employment tax is composed of 12.4% for Social Security and 2.9% for Medicare. It is important to calculate your self-employment tax rate so you know how much money to set aside at the end of the year. Late in this article, we'll go over an easy way to claim deductions and lower that tax bill.
Even if you are not a freelancer, you need to file income taxes. In fact, anyone earning money needs to report their income to the IRS. Income taxes vary based on your tax bracket. Check the updated IRS tax bracket here.
Who Will Receive A 1099?
If you contracted as a Wonoloer, you'll most likely receive a 1099-NEC in the mail. The requirement to receive a 1099-NEC is if you were paid more than $600 by a business. You won't receive a 1099 under $600 but you may still have to pay taxes.
Quarterly Estimated Taxes
As a Wonoloer, you'll need to file estimated tax payments four times a year. Estimated taxes were designed to help self-employed folks ease the burden of paying one large sum at the end of the year. Instead, they will make an estimated payment to the IRS four times a year.
Remember, you cannot deduct personal costs for write-offs. Only the business-specific portion of these expenses. You'll file these deductions on your Schedule C or profits and losses statement.
Note: If you would like software to scan your bank/credit card statements, organize and track your tax deductions, try Bonsai Tax. Users save on average $5,600 from their tax bill by using our software. Try a 14-day free trial here.
Time to File Your 2021 Wonolo Taxes
Whether you’re a freelancer or an entrepreneur, taxes are always something to be concerned about. As if the looming deadline isn’t enough of a stressor for you, there are also various tax forms that need to be filed! And it can all seem so complicated. That is why we created Bonsai Tax - our goal is to simplify your life by providing simple and efficient 1099 services without breaking your bank account in the process. Claim your 7-day free trial today.
Tax Accounting/ Legal/ Financial Note
It is appropriate you always seek professional advice from an accountant or tax expert. This guide is not meant to be viewed as tax accounting, legal or financial advice. Please speak with a tax, financial or other professional if you have any questions or concerns.
As a small business owner, understanding the various IRS-required forms for subcontractors is absolutely essential to remain compliant. This guide will let you know all about creating 1099 forms and what types of forms you may need..